DECA Entrepreneurship Vocabulary

Acquisition- The purchase of a company by another, larger firm, which absorbs the smaller company into its operations

Board of Directors- A group of individuals elected by a firm’s shareholders and charged with overseeing, and taking legal responsibility for the firms’ actions

Business Plan- Document in which the entrepreneur summarizes her or his business strategy for the proposed new venture and how that strategy will be implemented

Chief Executive Officer (CEO)- The person responsible for the firm’s overall performance

Co-Operative- An organization that is formed to benefit its owners in the form of reduced process and/or the distribution or surpluses at year-end

Common Stock- Shares whose owners usually have the last claim on the corporation’s assets (after creditors and owners of preferred stock) but who have voting rights in the firm

Conglomerate Merger- A merger of two firms in completely unrelated businesses

Corporate Governance- The relationship between shareholders, the board of directors and other top managers in the corporation

Divestiture- Occurs when a company sells part of its existing business operation to another company

Employee Stock Ownership (ESOP)- When a corporation buys its own stock with loaned funds and giving them its employees. Employees “earn” the stock based on some condition such as seniority. Employees control the stock’s voting rights immediately, even though they may note take physical possession of the of the stock until specified conditions are met, this aligns the employee’s interest with those of the shareholders, as they are the shareholders themselves.

Entrepreneur- A businessperson who accepts both the risks and the opportunities involved in creating and operating a new business venture

Franchise- A form of business by which the owner(franchisor) of a product, service or method obtains distribution/marketing through affiliated dealers (franchises). Example: McDonalds

Franchising Agreement- Specifies the duties and responsibilities of the franchise and the franchiser

Friendly Takeover- An Acquisition in which the management of the acquired company welcomes the firm’s buyout by another company

General Partner- A partner who is actively involved in managing the firm and has unlimited liability

Horizontal Merger- A merger of two firms that have previously been direct competitors in the same industry

Hostile Takeover- An acquisition in which the management of the acquired company fights the firm’s buyout by another company

Initial Public Offering (IPO)- Selling shares of stock in a company for the first time to the general investing public

Inside Directors- Members of a corporation’s board of directors who are also full-time employees of the corporation

Limited Liability- Investor liability is limited to their personal investments in the corporation; courts cannot touch the personal assets of investors in the event that the corporation goes bankrupt

Limited Partner- A partner who generally does not participate actively in the business, and whose liability is limited to the amount invested in the partnership

Merger- The union of two companies to form a single new business

Microenterprise- An enterprise that the owner operates part-time from the home while continuing regular employment elsewhere

Outside Directors- Members of a corporation’s board of directors who are not also employees of the corporation on a day-day basis

Parent Corporation- A corporation that owns a subsidiary

Partnership- A business with two or more or more owners who share in the operation of the firm and the financial responsibility for the firm’s debts

Preferred Stock- Shares whose owners have the first claim on the corporation’s assets and profits but who usually have no voting rights in the firm

Private Corporation- A business whose stock is held by a small group of individuals and is not usually available for sale to the general public

Public Corporation- A business whose stock is widely held and available for sale to the general public

Small Business- An independently owned and managed business that does not dominate its market

Sole Proprietorship- Business owned and usually operated by one person who is responsible for all of its debts

Spinoff- Strategy of setting up one or more corporate units as new, independent corporations. The corporation that does the spin off is a parent corporation. (division of a business, type of divestiture)

Stock- A share of ownership in a corporation

Stockholders or Shareholders- Those who own shares of a certain corporation

Strategic Alliance- An enterprise in which two or more persons or companies temporarily join forces to undertake a particular project.

Subsidiary Corporation- One that is owned by another corporation

Tender Offer- An offer to buy shares made by a prospective buyer directly to a corporation's shareholders.

Unlimited Liability- A person who invests in a business is liable for all debts incurred by the business; personal possessions can be taken to pay debts.

Vertical Merger- A merger of two firms that have previously had a buyer—seller relationship.

Managerial Accounting- capturing the business's day-to-day financial activities in pursuit of an organization's goals.

Question:

    If a business negotiates a 3.6% discount rate and has credit card sales this month of $78,450, what
amount does it owe the bank?

Answers:

    A. $2,902.65
B. $2,745.75
C. $2,667.30
D. $2,824.20 - Correct

Commercial Banks-Banks that offer service to the general public and companies

Debt financing- Borrowing money and not giving up ownership, comes with interest and strict rules

Liquid- A business’s current assets that are listed as financial statements

Nets sales- The base amount used for vertical analysis of items on the income statement

Buyout- The purchase of a controlling share in a company

Cash flow statement-a financial statement that shows the movement in the Cash account of a company. It presents cash inflows (receipts) and outflows (payments) in the three activities of business: operating, investing, and financing

Investment- The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit

Financing- the act of providing funds/capital for business activities, making purchases or investing and help them achieve their goals

Balance Sheet- a financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by shareholders.

Assets = Liabilities + Shareholders' Equity

Asset- a piece of property or equipment purchased exclusively or primarily for business use.

categories of assets: current and non-current, short-term and long-term, operating and capitalized, and tangible and intangible

Liability- A company’s financial debt or obligations that arise during the course of its business operations

Shareholder’s Equity- The net value of a company, or the amount that would be returned to shareholders if all the company’s assets were liquidated and all its debt repaid

Liquidate- Converts assets into cash or cash equivalents by selling them on the open market

Financier- Person or organization that provides capital for a company

Vertical analysis- a method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities and equities), in a balance sheet is represented as a proportion of the total account

Economic Downturn- A fall in economic growth just before recession

Net sales- Net sales are the number of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed

Paradigm Shift- A paradigm shift is a major change in how some process is accomplished. A paradigm shift can happen when new technology is introduced that radically alters the production process of a good

Sovereign Immunity- a legal doctrine by which the sovereign or state cannot commit a legal wrong and is immune from civil suit or criminal prosecution

Eminent Domain- the right of a government or its agent to expropriate private property for public use, with payment of compensation

Absolute Privilege- A special right, advantage or immunity granted or available only to a particular person or group of people

Infringement- Act of breaking the law or agreements in a contract

Consideration (in contract)- a benefit which must be bargained for between the parties, and is the essential reason for a party entering into a contract

National Labor Relations Act- an act protecting rights of employees and employers, encouraging collective bargaining (negotiation of wages and other subjects by a group of employees)

Vocational rehabilitation act- prohibits discrimination on the basis of disability in programs conducted by Federal agencies

Fair Labor Standards Act- establishes minimum wage, overtime pay, record-keeping, and youth employment standards affecting employees

Americans With Disabilities Act- A civil rights law that prohibits discrimination based on disability

Open Corporation- A corporation whose ownership shares are available for exchange on an open market

Consolidation- Combining small companies into one large one

Industrial User- a company that buys materials from other manufacturers to satisfy their own needs

Indirect agent- promoters who are third parties to a business, like a partner or affiliate, rather than a company's personnels

Agents- a person who represents a person or company in matters of business and who can make business decisions, agreements, etc., for them

Operating policy- a governing principle that mandates or constrains actions within a business

Binding Contract- An agreement in writing between two or more individuals or entities in which a court can impose penalties in the event one party attempts to negate on his or her promise

Tactical plans- short term plans for a business

Strategic plans- long term plans for a business

Market-segment analysis- analyzing a group of potential customers and collecting data based off them

Quota- A limited or fixed number or amount of people or things, in particular

Trade Credit- the credit extended to you by suppliers who let you buy now and pay later

Return on equity- the ability of a company to generate income with their investments

Secondary needs- wants such as entertainment or leisure

Primary needs- needs such as food or shelter

Payroll stub- A notice that direct deposit transaction has gone through

Corporate chain- Chain of business, Ex. Starbucks

Economic System- a system of production, resource allocation, and distribution of goods and services within a society or a given geographic area

performance measure- regular measurement of outcomes and results, which generates data on the effectiveness and efficiency of programs